CareCloud, Inc.

Good morning, ladies and gentlemen. Welcome to the CareCloud, Inc. First Quarter 2023 Results Conference Call. At this time, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to your host, Kim Blanche, CareCloud's General Counsel. Ms. Blanche, you may begin.

Good morning, everyone. Welcome to the CareCloud first quarter 2023 conference call. On today's call are Mahmoud Haque, our founder and executive chairman, Hadi Chaudhry, our chief executive officer, president and a director, and Bill Korn, our chief financial officer. Before we begin, I would like to remind you that certain statements made during this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. All statements, other than statements of historical facts made during this conference call, are forward-looking statements, including, without limitation, statements regarding our expectations and guidance for future financial and operational performance expected growth, business outlook, and potential organic growth and acquisition. Forward-looking statements may sometimes be identified with words such as will, may, expect, plan, anticipate, upcoming, believe, estimate, or similar terminology and the negative of these terms. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. These statements reflect our opinions only as to the date of this presentation, and we undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our press release and our report filed with the Securities and Exchange Commission where you will find a more comprehensive discussion of our performance and factors that could cause actual results to differ materially from these forward-looking statements. For anyone who dialed into the call by telephone, you may want to download our first quarter 2023 earnings presentation. Please visit our investor relations site, ir.carecloud.com, click on news and events, then click IR calendar, click on First Quarter 2023 Results Conference Call and download the earnings presentation. Finally, on today's call, we may refer to certain non-GAAP financial measures. Please refer to today's press release announcing our First Quarter 2023 results for a reconciliation of these non-GAAP performance measures for our GAAP financial results. With that said, I'll now turn the call over to our CEO, Hadi Chaudhry. Hadi?

Thank you, Kim. And thanks to all of you for joining us for our first quarter 2023 earnings call. We started 2023 building on an organic growth momentum we created throughout 2022. In the first quarter, we reported revenue of $30.1 million and adjusted EBITDA of $4.2 million. We are pleased that these numbers are in line with our internal expectations and keep us on track to deliver on our full year's guidance. Today, we will provide you with an update on our organic bookings momentum, our progress towards converting bookings into revenue recognized during the first quarter, the emerging growth opportunities in the Middle East, our increased focus on marketing efforts to raise awareness of our comprehensive solutions, and early adopters of our therapy EHR solution that I mentioned last quarter. First, I will provide an update on the continued momentum of our overall bookings, with a particularly meaningful contribution from our wellness offerings, which includes chronic care management and remote patient monitoring. After about a year on the market, it continues to gain traction with our physician space. Our recurring revenue bookings for first quarter 2023 were over $8 million. 2022 was a record year for bookings, and that certainly continued in 2023. We have seen good momentum in overall bookings, including wellness bookings, over the last year, and I would like to share a little detail on how it's converting to revenue. I'm going to talk first about overall bookings conversion and then break it down by tech-enabled RCM, force, and wellness. First, of the total recurring bookings we signed in 2022, 92% of the potential revenue has gone live with us in some form or fashion. In the first quarter, on an annualized basis, we recognize 44% of the potential revenue opportunity from those clients that have gone live. That said, each of the three businesses rank differently, so I'm going to walk through each one of them on a standalone basis. For our tech-enabled RCM, we have gone live with 88% of the potential revenue we booked last year in the first quarter. On an annualized run rate, we have recognized all of those potential revenue from the live clients. As a reminder, for our RCM solution, we typically anticipate a six-month time frame from signing bookings to going live with the business. For force, which is our staffing augmentation solution, we have gone live with 96% of the potential revenue, but recognized just 4% in the first quarter, again, on an annualized basis. This is in line with our expectations, and there are a couple of factors that will cause this to ramp over the course of the year. First, the large contract that we signed late last year with a well-known publicly traded healthcare technology company is currently in the pre-production phase. Under the terms of our agreement, we are sharing SOPs, background checks, trainings, and the like before we can start recognizing revenue. Subsequent to those close to the quarter, the second largest contract went live, and the customer is very pleased with the partnership so far. Together, these contracts represent a meaningful portion of the 96% of the potential revenue, but the first contributed minimal revenue in the first quarter, and the second will contribute to over second quarter results, but is not reflected in the numbers we reported today. The second factor leading to the divergence between potential revenue that has gone live and revenue recognized is that customers typically start with just a few employees and ramp up to their desired level over time. It is our experience that customers, especially larger, more sophisticated customers, will take between three and four quarters to reach their potential. Lastly, in our wellness solution, we have gone live with 93% of potential revenue and have recognized 7% of their potential revenue on an annualized basis. In this business line, go-live is defined by having conducted monitoring with or provided services to at least one patient in the practice. We expect this to ramp over the course of the year, and there is typically a 10-month cycle of signing a physician identifying the appropriate chronically ill patients, engaging them via mail and phone to get consent, and onboarding them. Once all of these are complete, the care managers create an individual care plan and work with physicians to implement it. We continue to work closely with our physician partners so they understand the ease of working with Care Club and the value we provide to their patients. We look forward to sharing our progress on our next few quarters calls. Next, I will provide an update on our efforts in the Middle East. As discussed last quarter, we remain committed to pursuing the emerging growth opportunities in the Middle East. We set our sights first on the UAE, given their government's plan to mandate EHR adoption in the next few years, similar to the meaningful use initiatives in the U.S. a decade ago. We have started making progress in this area and are very close to complete setting up an entity in the UAE to capitalize on this potential opportunity. We are continuing to pursue the certification process and plan to hold a groundbreaking at the Precision Med Expo in the UAE at the end of May. We have already begun the process of getting our solution certified and filing for required attestations. In terms of these international opportunities, we feel CareCloud is uniquely positioned for success for a couple of reasons. Our status and reputation as a publicly traded company in the U.S., our over two decades of experience in the EHR, professional services, and tech-enabled RCM businesses, the cost-effectiveness of our scaled operations, and our culturally familiarity with this part of the world. We look forward to keeping you posted as these potential meaningful opportunities unfold. I will now turn to an update on our marketing efforts. First, we are proud to report that for the second straight year, we were recognized in the best-in-class report under the category of small practice, ambulatory EHR, and practice management. This year, we are focused on continuing to raise awareness of CareCloud's offerings in the market to fuel our organic growth. We have had meaningful presence at many of the industry conferences this year, such as Vive and HIMSS. These conferences not only provide many leads for new customers, they also create opportunities to showcase our comprehensive solutions to the market. For some additional context, at the time of the IPO, we spent just 1% of revenue on sales and marketing. As of last year, That number had grown to 7%, and this year it is on track to reach 8%. This current marketing campaign seeks to bring attention to our innovative solutions, including our tech-enabled RCM solution, which is truly differentiated in the market as it sits on top of industry-leading state-of-the-art software technology products to help us drive better revenue growth in this mature EHR and practice management market. Our telehealth solution, which was ahead of the curve launching an year before the pandemic and quickly became an integral part of the healthcare practices. AI has been a hot topic in the news lately, but for CareCloud, it is nothing new as we have been leveraging AI from its very early stages. Our first AI-based product launched in early few years of the company was a scrubbing engine, and we have since launched several others over the last few years. Since then, we have layered in robotic process automation bots, or RPA bots, to automate mundane tasks and streamline back office processes in addition to being leveraged by our clients. It's been our belief that open APIs of AI will be the next wave of innovation in healthcare, similar to many other sectors. So we are evaluating ways we can effectively and safely use solutions like OpenAI and ChatGPT in a compliant and secure manner for our medical providers. We see this as further opportunity to leverage AI to improve workflow in EHRs and practice management systems as an avenue to reduce cost, increase profitability, and improve patient outcomes. We are still in R&B phase and not yet ready to make it provider-facing. Finally, an update on our therapy market opportunity I mentioned last quarter. We are making progress with two early adopters who are already gone live. We are supporting our thesis that our end-to-end solution is welcome change to outdated solutions prevalent in the market today. Wrapping up, CareCloud's first quarter results represent a strong start to the year and leave us well-positioned to focus on our numerous opportunities for growth throughout 2023, keeping us on track to meet our full year's expectations. With that, I will turn the call over to Bill to review the financials.